COA raises flag on 'validity' of Davao City's ₱9.48B assets, 'legality' of ₱1.32-B COVID procurements

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Metro Manila (CNN Philippines, May 6) — State auditors flagged the government of Davao City for the questionable existence of assets amounting to ₱9.48 billion, as well as the legality of its purchases for COVID-19 response, according to a 2020 audit report.

In a report on Davao City dated February 28, the Commission on Audit gave a "qualified opinion" on the city government's financial statements.

This means that while the Davao City government's financial reports were fairly presented, the auditor noted its failure to provide adequate disclosures on its property, plan, and equipment accounts.

The report stated that ₱9.48 billion, or 40.10% of the ₱23.66 billion total assets recorded as of end-December "could not be ascertained to its validity, correctness, and existence due to the absence of an actual count..."

The local government also failed to submit a Report on the Physical Count of Property, Plant and Equipment or RPCPPE resulting from the COVID-19 community quarantine restrictions, COA said.

The audit report added that the inventory accounts amounting to ₱97 million were also "doubtful and unreliable."

"There had been no actual count conducted nor an RPCI was submitted to validate such recorded balances, neither a reconciliation was made possible between the supply records and accounting records, again due to the constraints brought about by the COVID-19 pandemic," it explained. RCPI refers to Report on the Physical Count of Inventories.

The report also raised the "legality" of pandemic-related procurements including goods and grocery packs worth ₱1.32 billion.

For instance, deals intended to procure goods in response to the pandemic amounting to ₱309.93 million were directly negotiated with suppliers by representatives from the mayor's office without a written delegation of authority from the head of procuring entity.

Other transactions such as goods for Davao City's constituents, COA noted, were "not properly supported with the required documents" and "inconsistent with the laws, rules, and regulations..."

It also highlighted the distribution of over one million grocery packs worth ₱469.39 million during the lockdowns in 2020.

"[It] was not properly documented and reported which hindered the timely and complete audit of the funds, hence it cannot be ascertained whether the relief goods were actually and properly distributed to the intended beneficiaries."

COA also said the city government wasn’t able to observe procedural rules on the use of its Peace and Order Council or POC funds for COVID-19 response.

The report stated the POC realigned over ₱830 million of its budget for pandemic-related expenditures despite not passing any resolution that should contain guidelines on the supposed reappropriations. It added there was no itemized list of the proposed COVID-19 projects and services covered by POC funds. Instead, these were all lumped under “Emergency Crisis Intervention” in the local government’s Peace and Order and Public Safety plan.

These “cast doubt” on the city’s compliance with the Department of the Interior and Local Government’s directives, COA said.

The commission also listed observations on the ₱18.5-million worth of cash donations Davao City received for its pandemic response.

For one, it said these were wrongfully listed under the “Other Payables” account of the Trust Fund instead of the supposed “Trust Liabilities - DRRMF” account, thus resulting in an "inaccurate presentation” in the financial statements.

Additionally, although the post audit of disbursement vouchers showed the city used these donations to purchase relief items and pay for funeral services, these were not fully supported with other documents as prescribed by COA. This “deprives its donors and other concerned stakeholders” of the necessary information on how the money was utilized, it said.

In response, Davao City Mayor Sara Duterte, in a statement issued late Thursday, said the city government "sufficiently expounded on its earlier-submitted written comment and justification" during the COA Exit Conference in February.

"The General Services Office undertook to submit compliance on or before February 28 of the current year but physical/actual counting was not possible. These matters arose because of the Covid-19 community quarantine restrictions and the strict constraints brought about by the COVID-19 regulations prohibiting gatherings and meetings as well as the implementation of other alternative work arrangements," she explained.

On issues about the legality of some COVID-related deals, the city government has yet to reply for comments.